ROANOKE TIMES 
                      Copyright (c) 1997, Roanoke Times

DATE: Friday, January 31, 1997               TAG: 9701310037
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER

AEP OFFERS INCENTIVE FOR VOTE ON DEBT LIMITS

If you own shares of Appalachian Power Co.'s preferred stock and vote the right way at an upcoming shareholders' meeting, then the American Electric Power Co. subsidiary has got a deal for you.

The company is offering to pay a $1-per-share special cash payment to shareholders who vote in favor of a proposed amendment to Appalachian Power's articles of incorporation, provided the amendment passes. The clause would remove a $230 million limit on Appalachian Power's ability to issue debt that has a lifetime of less than 10 years.

Appalachian and ultimately AEP need the flexibility to issue more debt in order to operate in a newly emerging competitive marketplace for electric power, an AEP spokesman said.

When AEP reorganized itself last year along functional lines, such as power generation and transmission rather than the former geographic territories, the names of its subsidiaries, such as Appalachian Power, disappeared from the public eye. AEP, whose main offices are in Columbus, Ohio, became the name by which the company is known across its seven-state territory.

Although power customers began making out checks for their monthly bills to AEP, the formerly Roanoke-based Appalachian Power and other subsidiaries continue in existence to deal with state regulators and for other legal reasons.

The boards of AEP subisidiaries - Appalachian Power, Indiana Michigan Power Co. and Ohio Power Co. - are seeking proxies for shareholders meetings Feb. 28, when they'll vote to remove debt limits from corporate articles at all three companies. Competitors such as power marketers and independent power producers are not hampered by such debt restrictions, AEP said.

The subsidiaries aren't trying to buy votes, AEP spokesman Pat Hemlepp said. Rather, the companies are asking shareholders to read through a lot of paperwork, and the payment is an incentive for them to do that and vote, he said.

AEP also is offering preferred shareholders of the three subsidiaries a chance to cash in on their shares another way. AEP has said it will buy any or all of the preferred shares of the three subsidiaries through a tender offer that expires Feb.28.

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